July 1, 2012
By John Rumsey
The cosseted Brazilian banking sector is facing unprecedented challenges. A government push to lower interest rates and moves to encourage public sector banks to lend more as part of a drive to squeeze spreads is coming on top of much higher delinquency rates.
Average 90-day non-payment levels across businesses and individuals hit 6% in May, the highest level since the series began in 2000, according to central bank data. Individual credit defaults reached 7.98%, the highest level since November 2009 when it reached 8%.
Private banks would like to draw in their horns on credit, but are afraid of losing market share. The government has already enacted a bold series of m
The outlook for Brazilian banks and their shareholders has darkened. Crude government measures to stimulate credit look dangerous while the consumer story is starting to unravel